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Archipelago Of Accounts – The Banks Always Win

At work, our health insurance has been switched to a high-deductible PPO. Not to worry, we’ve also been granted Health Savings Accounts (HSA) in which to save money, tax-free, to pay bills before meeting the deductible.

That’s all well and good, but I can’t shake the feeling every time legislation comes out to do some activity (retire, save for education, health care) the only winner is the financial services industry.

Here’s why: all of these activities requires one to maroon a slice of money into an account designated for that purpose. What comes with accounts? That’s right, fees to the bank. The Wells-Fargo HSA we’ve got is $4.25 a month (paid, for now, by work). That’s $51 a year to hold money. The interest rate is a paltry 0.1%, so with $2000 in that account (the minimum cash balance before we’re allowed to invest), I’d make about $2.00, (net -$49 if I was paying the fees, as I will one day) Thanks for nothing. Further, while some banks graciously waive fees for meeting minimum balances, it’s harder for many people to meet the balance since their money is split so many ways.

These accounts limit my flexibility to spend as life events occur, limit the returns on my money, and cost me fees, and headaches. More statements to read, cards to carry, and fine print to decode.

If costs are to be tax-deductible, why not fix the tax code instead, so that all medical expenses, instead of those over a certain amount, are tax deductible, instead of these shameless handouts to the banks? Let me deduct things come tax time.